Touchy v. Houston Legal Foundation

• Citation: 432 S.W.2d 690
• Decision Date: 26 June 1968
• Docket Number: No. B--448,B--448
• Parties: Hugo A. TOUCHY et al., Petitioners, v. HOUSTON LEGAL FOUNDATION, Respondent.
• Court: Supreme Court of Texas

Page 690

432 S.W.2d 690

Hugo A. TOUCHY et al., Petitioners, v. HOUSTON LEGAL FOUNDATION, Respondent.

No. B--448.

Supreme Court of Texas.

June 26, 1968.

Rehearing Denied Oct. 23, 1968.

Frederick W. Robinson, Herbert Finkelstein, Houston, for petitioners.

Leroy Jeffers, Curtiss Brown, Houston, for respondent.

SMITH, Justice.

The question presented in this case is whether a lawyer has standing to maintain a suit to enjoin a corporation from violating the Texas Canons of Ethics, engaging in the unauthorized practice of law, and engaging in practices which are demeaning to the legal profession and economically harmful to individual practitioners. In effect, the courts below have held that a lawyer does not have standing to bring such a suit. Tex.Civ.App., 417 S.W.2d 625. We reverse the judgments below and order that the cause be reinstated on the docket of the 165th Judicial District Court of Harris County, Texas, for a trial on the merits.

Petitioners ¹, four practicing attorneys and an organization composed entirely of attorneys, brought this suit against the Houston Legal Foundation, a charitable corporation, hereinafter referred to as the Foundation. In this action petitioners sought to enjoin the Foundation from continuing certain practices which allegedly violated the Texas Canons of Ethics. They further sought to enjoin the Foundation from engaging in the unauthorized practice of law, and from engaging in practices, such as maintenance of a lawyer referral service, interviewing in the Harris County jail, and advertising, which were demeaning to the legal profession and economically harmful to individual practitioners. The Foundation filed a plea in abatement to the suit, alleging basically that petitioners did not have standing to bring the suit. The Foundation also filed a motion for summary judgment praying that petitioners take nothing because petitioners had no standing to raise questions regarding ethics and because, as a matter of law, the Foundation was not engaged in the unauthorized practice of law or in conduct demeaning to the profession. The trial court considered the plea in abatement and the motion for summary judgment at one hearing. No evidence was introduced in support of or in opposition to the plea in abatement. The trial court then entered judgment that the entire suit be dismissed. The judgment of the trial court is unique in that it recites that the court sustained a motion for summary judgment after having first sustained a plea in abatement. ² However, upon sustaining the plea in abatement to the entire suit, and entering the judgment of dismissal, the court's action in granting the summary judgment was meaningless. Therefore, the only issue properly before this Court is whether the trial court correctly sustained the Foundation's plea in abatement.

Before resolving this issue, we deem it necessary to outline in some detail the nature of the Foundation's operations as delineated in the Statement of Principles governing the organization. The Foundation, a charitable, non-profit corporation, functions through three separate divisions--the Civil Division, the Criminal Division, and the Lawyer Referral Service. The Civil Division is comprised of ten (10) neighborhood law offices which are run by approximately twenty-three (23) attorneys. This division handles legal matters of a civil nature for indigents. When a person goes into a neighborhood office handling civil matters, he is interviewed to see if he meets indigency standards which are set by the Foundation. ³ If it is determined that he is an indigent, he is assigned an attorney who handles all further proceedings with that client. No fees are charged or collected for the services rendered to indigent persons.

The Criminal Division of the Foundation ⁴ sends members of the Foundation's Personal Bond staff daily to the Harris County jail to interview persons accused of crime. If the accused states that he has no counsel and neither he nor anyone acting in his behalf can employ counsel and that he wants a court-appointed attorney, he is given an application form to complete. An affidavit of financial status and an affidavit requesting appointment of counsel are made by the accused. The financial information given by the prisoner is considered and verified and if the accused qualifies as an indigent, a recommendation is made to the court that an attorney or attorneys be appointed. This is merely a recommendation and may be accepted or rejected by the court. Names of private attorneys are given to the court in rotation; in no instance is a Foundation attorney recommended for appointment. The chief of the Criminal Division does designate a Foundation attorney to assist the court-appointed attorney should assistance be desired. In addition, the Personal Bond staff, if requested to do so by a prisoner, takes applications for the prisoner's release on personal bond. If investigation reveals that the accused has close ties to the community and is a stable person who will, in all likelihood, appear for his trial without security, the Foundation recommends in writing to the court that the accused be released on his personal bond. This recommendation may also be accepted or rejected by the court.

The Lawyer Referral Service, which refers both civil and criminal cases, refers people to a lawyer when the people do not qualify to receive free legal services, either because they earn too much or because their case is a fee generating one. These people are made aware of the Lawyer Referral Service by the advertising media or by the recommendation of lawyers on the staff of the Foundation. ⁵ Any qualified lawyer practicing in Harris County who wishes to join and who pays a subscription fee may be admitted to the Lawyer Referral Service panel. Before directing an interested person to an attorney from the Lawyer Referral Service panel, a member of the Lawyer Referral Service staff interviews the interested person to determine if the person has a legal problem. If it is determined that the interested person is in need of legal advice, the person is referred to an attorney. Attorneys on the panel are required to charge a basic fee set by the Service for this initial interview; thereafter, the fee for legal services is negotiated by the attorney and client. Upon agreement between the attorney and the interested person, the relationship of attorney and client is established.

Petitioners, by their pleadings, allege that the activities of the Foundation are subject to challenge on the grounds of unethical practice, unauthorized practice, and demeaning practices. Relative to the ground that the Foundation itself violates specific canons of the Texas Canons of Ethics, the petitioners allege that the Foundation advertises its services and solicits business in contravention of Canon 24, represents conflicting interests in contravention of Canon 6, and breaches the confidence of parties it represents in contravention of Canon 34.

As to the contention that the Foundation is engaged in the unauthorized practice of law, the thrust of petitioners' pleadings is that the Foundation as a corporation is administering legal aid, and in doing so is violating the provisions of Article 320a--1, Vernon's Annotated Texas Civil Statutes, which prohibits non-lawyers (corporations) from practicing law. Petitioners further contend that the Foundation directly represents its clients as an attorney by signing pleadings, motions, orders and other such documents filed in the various courts of Harris County, Texas.

Finally, as to the allegation that the Foundation's practices are demeaning in character, the petitioners contend that interviewing accused prisoners in the jails, operation of a lawyer referral service, and advertising, are a threat to the heritage and economics of the legal profession. Petitioners contend that the ultimate objective of the advertising by the Lawyers Referral Service is to attract interested persons to the Lawyer Referral Service rather than to apprise the public that it should seek a lawyer when in need of legal advice. By operating in this manner, the Foundation is allegedly placed in the position of being able to 'dole out' cases to the lawyers of Harris County. Petitioners also complain that by interviewing prisoners in the jails, under the guise of securing for indigents free legal representation, the Foundation discourages numerous prisoners, who could have paid a fee, from employing private practitioners. According to petitioners, private attorneys cannot compete with the Foundation in these respects because they must observe the Canons of Ethics.

The effect of the action of the trial court in sustaining the plea in abatement was to hold that the petitioners did not have standing to maintain the suit. In so holding, the trial court did not reach the merits. The question of standing is entirely different from the question of whether or not the petitioners are entitled to judgment after a trial upon the merits. We hold that, due to the special interest attorneys have in their profession, they have standing to maintain a suit to enjoin action which allegedly damages their profession. Stewart Abstract Co. v. Judicial Commission, 131 S.W.2d 686 (Tex.Civ.App.--1939, no writ). See Woods v. Kiersky, 14 S.W.2d 825, 828 (Tex.Com.App.--1929, jdgmt. adopted). However, plaintiffs cannot succeed in seeking to apply rules to a person when the rules expressly do not apply to the person. For example, petitioners in this suit complain of some practices, such as advertising and interviewing persons in the Harris County jail, on the grounds that these practices violate the Canons of Ethics. This suit is directed solely against the Foundation, which is a non-profit corporation. The Canons of Ethics do not apply to corporations or non-attorneys. The texas Canons of Ethics apply solely to attorneys at law. Section 4, of Article 320a--1, Vernon's...